Honduras sets stage for 3 privately run cities

TEGUCIGALPA, Honduras 
Investors can begin construction in six months on three privately run cities in Honduras that will have their own police, laws, government and tax systems now that the government has signed a memorandum of agreement approving the project.

An international group of investors and government representatives signed the memorandum Tuesday for the project that some say will bring badly needed economic growth to this small Central American country and that at least one detractor describes as "a catastrophe."

The project's aim is to strengthen Honduras' weak government and failing infrastructure, overwhelmed by corruption, drug-related crime and lingering political instability after a 2009 coup.

The project "has the potential to turn Honduras into an engine of wealth," said Carlos Pineda, president of the Commission for the Promotion of Public-Private Partnerships. It can be "a development instrument typical of first world countries."

The "model cities" will have their own judiciary, laws, governments and police forces. They also will be empowered to sign international agreements on trade and investment and set their own immigration policy.

Congress president Juan Hernandez said the investment group MGK will invest $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast. That first city would create 5,000 jobs over the next six months and up to 200,000 jobs in the future, Hernandez said. South Korea has given Honduras $4 million to conduct a feasibility study, he said.

"The future will remember this day as that day that Honduras began developing," said Michael Strong, CEO of the MKG Group. "We believe this will be one of the most important transformations in the world, through which Honduras will end poverty by creating thousands of jobs."

Hernandez said another city will be built in the Sula Valley, in northern Honduras, and a third in southern Honduras. He gave no other details.

The project is opposed by civic groups as well as the indigenous Garifuna people, who say they don't want their land near Puerto Castilla on the Caribbean coast to be used for the project. Living along Central America's Caribbean coast, the Garifuna are descendants of the Amazon's Arawak Indians, the Caribbean's Caribes and escaped West African slaves.

"These territories are the Garifuna people's and can't be handed over to foreign capital in an action that is pure colonialism like that lived in Honduras during the time that our land became a banana enclave," said Miriam Miranda, president of the Fraternal Black Organization of Honduras.

Oscar Cruz, a former constitutional prosecutor, filed a motion with the Supreme Court last year characterizing the project as unconstitutional and "a catastrophe for Honduras."

"The cities involve the creation of a state within the state, a commercial entity with state powers outside the jurisdiction of the government," Cruz said.

The Supreme Court has not taken up his complaint.

In an interview Wednesday, Strong said that as soon as the Honduras government gives final approval to the boundaries of the sites, the developers will begin building infrastructure on the first half square mile of the first city, where they hope to have two or three businesses as tenants within 18 months.